New York AG Letitia James Warns CLARITY Act Would Limit State Crackdown on Crypto Fraud

New York’s Attorney General (AG) Letitia James has voiced against the CLARITY Act, noting that the crypto bill interferes with states’ ability to crack down on crypto fraud. This comes ahead of a potential vote on the bill before the Senate heads for its August recess.

New York AG Opposes CLARITY Act

In written testimony she delivered to a Senate committee, the New York AG said the CLARITY Act seeks to interfere with and preempt states’ investor protection laws and dilute their ability to prosecute fraud. “This is a mistake,” she declared.

James also noted that state and local law enforcement agencies are responsible for most of the law enforcement work in the country, which is why she believes that they should play a major role in the crackdown on crypto crimes. She further explained that State and local law enforcement are also responsible for around 98.8% of arrests across the country, while federal authorities are responsible for around 1.2%.

“Despite this, CLARITY would neuter state and local law enforcement by preempting states and preventing them from fully prosecuting rampant fraud and violations of law by actors in the cryptocurrency marketplace,” the New York AG said.

Democratic senators have also voiced concerns, saying the Department of Justice (DOJ) cannot be the sole enforcer of the ethics provision and pushing for state prosecutors to also have the power to enforce the rule. As CoinGape reported, the CLARITY Act is one of the major events to watch in the crypto market this week as Democrats and Republicans continue negotiations toward a bipartisan deal.

On A Potential Floor Vote For The Crypto Bill

Senate Majority Leader John Thune has signaled that he may set a floor time for the crypto bill before the August recess, regardless of whether they have the vote or not to invoke cloture. However, the crypto bill is currently struggling for floor time with other major bills such as the SAVE America Act and Russia sanctions bill, which may take priority.

Speaking to the press today, Thune mentioned banks’ concerns over the stablecoin yield provision in the CLARITY Act, noting that lobbying from these banking groups was also impacting negotiations. He also suggested that there would be lots of amendments if they eventually file cloture on the crypto bill.

Major stakeholders continue to voice their support for the CLARITY Act even as time runs out to pass the bill before the August recess. This includes the brokerage firm Charles Schwab, which backed the crypto bill over the weekend.

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